question
1. A downward sloping demand curve can be explained by
answer
(E) I, III and IV only
diminishing marginal utility.
the substitution effect.
the income effect.
diminishing marginal utility.
the substitution effect.
the income effect.
question
Which of the following will not change the demand for oranges?
answer
(C) A change in the price of oranges
question
3. If there is an increase in demand for a good, what will most likely happen to the price and quantity of the good exchanged?
answer
(B) Increase Increase
question
4. If hot dogs are an inferior good, an increase in income will result in
answer
(D) a decrease in the demand for hot dogs.
question
5. An increase in the price of gasoline will cause the demand curve for tires to shift in which direction?
answer
(B) To the left, because gasoline and tires are complements
question
6. Assume that coal is a normal good. If the price of coal increases and the quantity sold increases, which of the following is consistent with these observations?
answer
(A) The price of oil increased, oil and coal being substitutes.
question
7. During a football game, it starts to rain and the temperature drops. The senior class, which runs the concession stand and is studying economics, raises the price of coffee from 50 cents to 75 cents a cup. They sell more than ever before. Which answer explains this?
answer
(D) The demand for coffee increased.
question
8. Which of the following statements best reflects the law of diminishing marginal utility?
answer
(D) "I couldn't eat another doughnut if you paid me."
question
9. Which of the following will not cause the demand curve for athletic shoes to shift?
answer
(E) A decrease in the price of athletic shoes
question
10. Assume that the demand for apples is downward sloping. If the price of apples falls from $.80 per pound to $.65 per pound, which of the following will occur?
answer
(B) A larger quantity of apples will be demand-
ed.
ed.
question
11. On the graph above, what area represents con-
sumer surplus when the price is $10?
sumer surplus when the price is $10?
answer
(C) C
question
12. If the cost of producing automobiles increases, the price, equilibrium quantity and consumer surplus will most likely change in which of the following ways?
answer
(C) Increase Decrease Decrease
question
13. Compare 2000 with 2001. Which of the following statements is (are) true?
answer
(C) I and IV only
Demand has increased.
Quantity supplied has increased.
Demand has increased.
Quantity supplied has increased.
question
14. Producer surplus is the
answer
(D) amount the seller is paid less the cost of production.
question
15. During the 1990s, the price of VCRs fell by about 30 percent, and quantity sold decreased by the same amount. The demand for VCRs must
answer
(E) have shifted to the left.
question
16. Which of the following will occur if a legal price floor is placed on a good below its freemarket equilibrium?
answer
(D) The equilibrium price will ration the good.
question
17. A marketing survey shows that gate receipts would increase if the price of tickets to a summer rock concert increased, even though the number of tickets sold would fall. What does this imply about the price elasticity of demand for concert tickets?
answer
(A) Demand is inelastic.
question
18. According to the graph above, which of the following will occur if a legal price ceiling is imposed at price X?
answer
(A) Shortages will occur.
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19. Which of the following statements about price controls is true?
answer
(E) Price ceilings and price floors result in a misallocation of resources.
question
20. If the price of lunch at the school cafeteria increases and cafeteria revenue remains constant, the elasticity of demand for a school lunch must be
answer
(C) unit elastic.
question
21. If an excise tax is imposed on a product, consumer surplus and producer surplus for this good will most likely change in which of the following ways?
answer
(A) Decrease Decrease
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22. If the price of paperback books increases and consumer expenditures on paperback books also increase, which of the following is necessarily true?
answer
(E) The demand for paperback books is inelastic.
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23. The substitution effect causes a consumer to buy less of a product when the price increases because the
answer
(B) product is now more expensive compared to similar products.
question
24. Based on the information in the table above, which product(s) is/ are inferior?
answer
(E) Product B and D only
question
Brooke is spending all of her income consum-
ing products X and Y. If MUx= 6, what should Brooke do to maximize her satisfaction? MUy/ P/ Px= 10 and y
ing products X and Y. If MUx= 6, what should Brooke do to maximize her satisfaction? MUy/ P/ Px= 10 and y
answer
(B) Buy more X and less Y.
question
26. If the price of a good decreases by 3 percent and total revenue increases, the elasticity of demand for the good could possibly be
answer
(A) 1.3
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27. Advocates of higher minimum wages for unskilled labor defend their position by arguing that
answer
(A) low-income workers deserve to earn incomes above the poverty level.
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